Congress looks at doing away with the $1 bill, pushing coin

WASHINGTON, DC - American consumers have shown about as much appetite for the $1 coin as kids do their spinach. They may not know what's best for them either. Congressional auditors say doing away with dollar bills entirely and replacing them with dollar coins could save taxpayers some $4.4 billion over the next 30 years.

Vending machine operators have long championed the use of $1 coins because they don't jam the machines, cutting down on repair costs and lost sales. But most people don't seem to like carrying them. In the past five years, the U.S. Mint has produced 2.4 billion Presidential $1 coins. Most are stored by the Federal Reserve, and production was suspended about a year ago.

The latest projection from the Government Accountability Office on the potential savings from switching to dollar coins entirely comes as lawmakers begin exploring new ways for the government to save money by changing the money itself.
The Mint is preparing a report for Congress showing how changes in the metal content of coins could save money.

The last time the government made major metallurgical changes in U.S. coins was nearly 50 years ago when Congress directed the Mint to remove silver from dimes and quarters and to reduce its content in half dollar coins. Now, Congress is looking at new changes in response to rising prices for copper and nickel.
At a House subcommittee hearing Thursday, the focus was on two approaches:
--Moving to less expensive combinations of metals like steel, aluminum and zinc.
--Gradually taking dollar bills out the economy and replacing them with coins.
The GAO's Lorelei St. James told the House Financial Services panel it would take several years for the benefits of switching from paper bills to dollar coins to catch up with the cost of making the change. Equipment would have to be bought or overhauled and more coins would have to be produced upfront to replace bills as they are taken out of circulation.
But over the years, the savings would begin to accrue, she said, largely because a $1 coin could stay in circulation for 30 years while paper bills have to be replaced every four or five years on average.

"We continue to believe that replacing the note with a coin is likely to provide a financial benefit to the government," said St. James, who added that such a change would work only if the note was completely eliminated and the public educated about the benefits of the switch.

Even the $1 coin's most ardent supporters recognize that they haven't been popular. Philip Diehl, former director of the Mint, said there was a huge demand for the Sacagawea dollar coin when production began in 2001, but as time wore on, people stayed with what they knew best.

"We've never bitten the bullet to remove the $1 bill as every other Western economy has done," Diehl said. "If you did, it would have the same success the Canadians have had."

Beverly Lepine, chief operating officer of the Royal Canadian Mint, said her country loves its "Loonie," the nickname for the $1 coin that includes an image of a loon on the back. The switch went over so well that the country also went to a $2 coin called the "Toonie."

Rep. Bill Huizenga, R-Mich., affirmed that Canadians have embraced their dollar coins. "I don't know anyone who would go back to the $1 and $2 bills," he said.
That sentiment was not shared by some of his fellow subcommittee members when it comes to the U.S. version.

Rep. Lacy Clay, D-Mo., said men don't like carrying a bunch of coins around in their pocket or in their suits. And Rep. Carolyn Maloney, D-N.Y., said the $1 coins have proved too hard to distinguish from quarters.

"If the people don't want it and they don't want to use it," she said, "why in the world are we even talking about changing it?"

"It's really a matter of just getting used to it," said Diehl, the former Mint director.
Several lawmakers were more intrigued with the idea of using different metal combinations in producing coins.

Rep. Steve Stivers, R-Ohio, said a penny costs more than 2 cents to make and a nickel costs more than 11 cents to make. Moving to multiplated steel for coins would save the government nearly $200 million a year, he said.

The Mint's report, which is due in mid-December, will detail the results of nearly 18 months of work exploring a variety of new metal compositions and evaluating test coins for attributes as hardness, resistance to wear, availability of raw materials and costs.

Richard Peterson, the Mint's acting director, declined to give lawmakers a summary of what will be in the report, but he said "several promising alternatives" were found.

WASHINGTON – At least one corner of the federal government has a money problem: It's sitting on too much of it.

The U.S. Mint has produced $1.4 billion in surplus dollar coins that are sitting in Federal Reserve vaults. So Vice President Biden announced Tuesday that the Treasury Department would stop mass producing the presidential coins.

"They make hundreds of millions of these coins every year, 40% of them end up being returned to the Federal Reserve because nobody wants them. And here's the worst part: They're still making coins of presidents from the 1800s, meaning the United States Mint is about halfway through its planned production," Biden said at an event to highlight the administration's efforts to curb government waste.

"And as it will shock you all, the call for Chester A. Arthur coins is not there," Biden joked.

But if the presidential coin is such a clear case of wasteful government spending, at least one taxpayer watchdog is growling.

"We're honestly outraged about this," said Tom Schatz, president of Citizens Against Government Waste. "If they wanted to stop producing something that loses money in terms of minting coins, they should get rid of the penny and nickel."

The dollar coin, he said, actually saves taxpayers money. That's because it costs 18 cents to produce, with the rest going to the government as profit. And because coins last longer than bills, shifting to a dollar coin could save $5.6 billion over 30 years, according to the U.S. Government Accountability Office.

But for that to happen, the government would have to take dollar bills out of circulation.

"I don't think that's something Americans want to see us do," said Rep. Kevin Yoder, R-Kan., the author of one of five pending bills that would have suspended production of dollar coins. "The Fed policy has been to promote the dollar bill and the dollar coin, and Americans have consistently chosen the dollar bill."

The Mint will make a limited number of presidential dollars available only to collectors willing to pay above face value, beginning with one featuring Arthur next spring, Treasury spokesman Matthew Anderson said.

Beth Deisher, the editor of Coin World magazine, called the presidential coin "a wonderful teaching tool, and a nice collectible at face value."

She said the Obama administration's decision to suspend production is just the latest blunder on dollar coin policy that's been mismanaged since the ill-fated Susan B. Anthony dollar — often confused for a quarter — in 1979. Since then, most other Western nations have saved money by moving their low-denomination bills to coins, she said.

"We can understand why they made the decision," she said. "But in the long run they're dealing with symptom, not the problem."

Vice President Joe Biden and several cabinet secretaries announced today the administration's efforts to identify and eliminate misspent tax dollars. My favorite – the savings of $50 million annually by no longer minting unneeded and unwanted dollar coins. Deputy Secretary of the Treasury Neal Wolin says they currently have a decade worth of excess coins on the shelves! From the White House release:

The Vice President and Secretary Geithner announced the Administration’s plan to stop the wasteful production of $1 coins for circulation. In 2005, Congress enacted the Presidential $1 Coin Act, which mandated that the United States Mint issue new Presidential $1 Coins with the likeness of every deceased President. But more than 40 percent of the $1 coins that the United States Mint has issued have been returned to the Federal Reserve, because nobody wants to use them.As a result, nearly 1.4 billion excess dollar coins are already sitting unused in Federal Reserve Bank vaults – enough to meet demand for more than a decade. But until today, the Mint was on pace to produce an additional 1.6 billion dollar coins through 2016.To put a stop to this waste the Administration will halt the production of Presidential $1 Coins for circulation. The Administration will still be required, by law, to continue to produce a relatively small number of the coins to be sold to collectors, at no cost to taxpayers. Instead of producing 70-80 million coins per President, the United States Mint will now only produce as many as collectors want. Regular circulating demand for $1 coins will be met through the Federal Reserve Banks' existing inventory, which will be drawn down over time. Overall, this step will save at least $50 million annually over the next several years.“At the Treasury Department, we’re continuing to work hard in support of President Obama and Vice President Biden’s efforts to cut waste and streamline government,” said Treasury Secretary Tim Geithner. “Putting a stop to the minting of surplus $1 coins represents a significant opportunity to reduce costs and improve efficiency. In these tough times, Americans are making every dollar count, and they deserve the same from their government. We simply shouldn’t be wasting taxpayer money on money that taxpayers aren’t using.”Treasury to stop producing unneeded dollar coins – The 1600 Report - CNN.com Blogs

At the rate of current inflation and rate of printing new currency, a carwash will be 20 dollar coins in five years.

We are going to electronic currency, and this is only going to accelerate us having chips implanted in our hands and foreheads ..

In the near future we will know who was mugged, they will be missing their hand.

I'd support such a thing if they also phased out the penny and maybe even the nickle. In todays world and prices why do we need penny and nickle prices on things? Do we have penny or nickle candy anymore even? Just round to the nearest zero. How much would phasing out the penny and nickle save?